THE DARK SIDE OF OFFHSORING: CSIR ACCUSATIONS IN THE EU MANUFACTURING INDUSTRY

Abstract

This study examines whether offshoring production activities to emerging economies increases the likelihood of Corporate Social Irresponsibility (CSIR) accusations among the top 200 listed EU-based manufacturing Multinational Organisations (MNOs) from 2010 to 2018. Using zero-inflated negative binomial (ZINB) regression models with and without a one-year time lag, the analysis found no significant relationship between offshoring and CSIR accusations. These findings challenge existing literature on CSIR accusations caused by a misalignment of a MNO’s efficiency-seeking strategy and stakeholder expectations, suggesting either limited engagement in CSIR or emphasize the low stakeholder visibility of emerging economies. Counterintuitively, MNOs with higher ESG scores were more likely to face CSIR accusations, potentially caused by higher stakeholder expectations. A MNO’s size was positively associated with CSIR accusations, though the interaction with offshoring was not significant. Additional results showed that older MNOs and those with a higher return on assets (ROA) were less likely to receive CSIR accusations. Overall, the study contributes to the debates on stakeholder legitimacy, strategic visibility and the paradox of ESG performance.